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Dec 19 2023

What the Autumn Statement 2023 means

Last month the Chancellor Jeremy Hunt delivered the Autumn Statement for 2023. This document, along with the Budget that typically gets announced in the spring, serves to update the general public on the government’s economic plans. The Autumn Statement is usually based off forecasts made by the Office for Budget Responsibility (OBR), as well as many other potential factors both domestic and international. The government’s plans for the economy typically consist of various changes in tax and spending, potentially causing far-reaching effects on individuals and businesses alike.

In this post, you’ll find a detailed breakdown of this year’s Autumn Statement by our team of qualified ICAEW chartered accountants.

Who is affected by the Autumn Statement?

In short, everyone. The measures introduced in the Autumn Statement and Budget are sweeping changes that affect people across the UK. However, certain changes may affect certain parties based on their situation, location, and whether they are an individual or a business. This is especially true for tax rates and thresholds, as those living in Scotland and Wales will be affected differently due to the devolved powers given to their systems of government (the Scottish Parliament and National Assembly of Wales respectively).

While we won’t be covering every change made in the 2023 Autumn Statement, we will be highlighting the key changes that we have identified as important for business owners and families in England.

The main points of the Autumn Statement

The Autumn Statement was announced on the 22nd of November, along with the publishing of supporting documents. All of these documents can be found on the government website. Instead of sifting through reams of official documentation, we’ve done the hard work for you and collated the relevant information here.

A standout headline to come out of the Autumn Statement has been the reductions in different classes of National Insurance, to be implemented next year. These were:

  • From 6th January 2024, the Class 1 national insurance rate for employees is to fall from 12% to 10%. For those holding more than one employment, this means it may be possible to reduce your national insurance contributions even further.
  • The self-employed Class 2 national insurance fixed payments, which are currently set at £3.45 per week for those with over £12,570 in yearly profits, will be abolished. This leads to savings of £179.40 per annum for those that fall into this category with effect from 6th April 2024. Contributory benefits, including the state pension will remain alongside this.
  • The self-employed Class 4 national insurance rate will drop from 9% to 8% effective from 6th April 2024.

As detailed in the previous year’s Autumn Statement, the zero rate of tax dividend threshold is set to fall from £1,000 to £500 from April 5th, 2024. This will not come with any change to the dividend tax rate. It is therefore recommended that those with control over dividends should make use of their allowance before it shrinks.

As of the 5th of April 2024, the annual exemption for CGT will fall from the current threshold of £6,000 to £3,000. This can potentially lead to a further £840 in tax payable, depending on what disposals you make and when you are making them. Speaking to a ICAEW Chartered Accountant will ensure you are disposing of assets in a tax efficient way, including accessing Business Asset Disposal Relief.

At the time of writing, there is no change as to how the capital gain above the annual exemption will be taxed. The CGT rate will be dependent upon a combination of the taxpayer’s status, total income and the type of asset disposed of.

Changes to off-payroll working could impact income tax and NI liabilities when they come into effect in 2024. HMRC will also have additional powers to enforce the rules, as well as off-set tax and NI contributions. As off-payroll workers are considered employees for the purposes of tax, the above changes to National Insurance will have to be considered also. We use our expertise to give bespoke business advice on PAYE and NIC for employers.

Corporation tax is still set to be charged at between 19% and 25% as expected. However, the government is introducing ‘full capital expensing’ to support certain businesses over a three-year period. Small companies with profits under £50,000 per annum will still pay at the lower rate of corporation tax, and companies with profits between £50,001 and £250,000 will get Marginal Relief.

The current allowance for the annual pension, annual money purchases, and the minimum Tapered Annual Allowance will remain for the next tax year. From April 6th 2024, in the event that a pension member over the age of 75 dies, any sum that hasn’t been utilised will be passed over to the relevant beneficiaries. However, any amount that goes above the limit will be taxed according to the beneficiaries’ marginal rate of tax. The effect of these changes to the state pension will vary depending on your situation and the tax year in which you are considering the costs.

The state pension is set to rise based on figures from September 2023, in line with inflation and the highest average earnings.

Tax advice from Chartered Accountants

Making sense of changes to tax bands and allowances can be a massive headache, especially when you’re trying to run a business. However, being aware of the effect the Autumn Statement has will enable you to make the most of opportunities for financial efficiency when they arise. At Jan McDermott Chartered Accountants, it’s a fundamental part of our job to advise on courses of action that will meet your needs and benefit your business. We take the time to understand what your priorities are, and how to get the results for you. Our lines of communication are always open if you are ever unsure about your position.

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